Aakash tab production cost less than $35, government buying at $49

NEW DELHI: A dream project of the government, the 'world's cheapest tablet PC', Aakash, is being produced at less than USD 35 (approximately Rs 1,750) per unit, but the replacement warranty attached to it has led to an increase in its price by about USD 14 to USD 49.98 per piece.

"The government has asked for a special replacement warranty. Government has asked us not to to repair it (Aakash Tablet)... You will have to replace it... which is a big cost," Suneet Singh Tuli, the CEO of Datawind, the company manufacturing the tablet, told PTI.

Tuli further explained that the ratio of defects in any device sold in India is higher when compared to America because of the harsh climatic conditions here.

"Those kind of costs add to it. This (Aakash) is Rs 2,200... it can be Rs 1,700. Actual manufacturing cost still is less than Rs 1,750. But there are all these other conditions which take it above Rs 1,750," he said.

On July 22, 2010, HRD Minister Kapil Sibal had unveiled a prototype of the device and announced that it would be developed for use at around USD 35 per unit.

To ensure complete transparency and a level playing-field, the National Mission on Education through Information and Communication Technology ( NME-ICT) decided to task IIT Rajasthan, Jodhpur, with the job of procuring and testing these devices, based on the design and specifications that the mission's team had finalised.

IIT Jodhpur had floated tenders and the lowest bidder quoted an ex-factory price of USD 37.98, which was close to the cost mentioned by the minister.

This cost comprised components and material, as well as manufacturing expenses. The final landed price of USD 49.98 (Rs 2,276) per unit included taxes, levies, and charges like freight and insurance, servicing and documentation, etc.

Tuli said people have been challenging the development of such a low cost device, but by selling this device to the government, Datawind is making enough profits, which even allows him to donate 10 per cent of the total profit to charity.

Tuli said that over-and-above the production cost, Datawind pays almost 20 per cent as taxes, which add to the cost of the device.

"If we bring it after making in China, then there would have been no issues, because it's exempted from duties. I would have not been required to pay 4 per cent VAT (value added tax). Getting it from China and selling in India would have not make it exciting. Therefore, we made it at Hyderabad," Tuli said.

He said that company will sell the commercial version of Aakash in the market for Rs 2,999, which - unlike the government's Aakash tablet with a 1-year replacement warranty - will carry only a 30-day replacement warranty.

Tuli has said that he will sell the government Aakash tablets for Rs 1,750 if the government orders 10 lakh units. At present, Datawind has an order for supplying 1 lakh units to the government.

The government is buying the tablets for Rs 2,276 per unit and giving them to education institutes at a 50 per cent subsidy.